1. Rule 205 should exclude attorneys not licensed to practice law in the United States.

a. The rule does not take into account the possible conflict with professional standards of conduct in foreign countries. There is no indication that the Commission has fully considered the possible conflict between the requirements of the rule and the professional standards that govern attorney conduct in foreign countries. There are foreign private issuers from dozens of countries throughout the world that file reports with the Commission. In addition, United States publicly held companies do business in countries throughout the world. There is a significant likelihood that the rule, particularly the provisions dealings with "noisy withdrawal," would require foreign attorneys to violate the rules of professional responsibility that apply to them in their home jurisdictions. Foreign attorneys, especially those that represent foreign private issuers that file reports with the Commission, should not be put into the position of being forced to violate United States law or the laws of their primary jurisdictions.

b. Commission rules cannot preempt the field vis-a-vis rules applicable in foreign countries. In Part V of the discussion of the proposed rule (text at footnote 83), the Commission considered whether Congress intended for the Commission's rule to "occupy the field" on this issue. This may be appropriate in dealing with ethical rules in the United States due to the supremacy clause of the United States constitution, which would have the effect of overriding conflicting state laws in favor of the federal rule. However, there is no basis to contend that the Commission could adopt rules that would preempt the ethical rules applicable to lawyers licensed to practice law in other countries. We believe that it is inappropriate for the Commission to take action that would create such a conflict.

c. The rule is unrealistic in its application to many foreign lawyers. The definition of "appearing and practicing before the Commission," in combination with the provisions of Section 205.4 of the proposed rule, has the effect of stating that the general counsel of every foreign private issuer filing reports with the Commission practices before the Commission. In reality, the general counsel of most foreign private issuers, especially those in civil law, non-English-speaking countries, are not familiar with United States securities laws and rely totally upon the assistance of American attorneys for all matters dealing with the Commission and United States securities laws. In most instances, these foreign lawyers simply are not qualified, and probably cannot be made qualified, to meet the objective standard that the proposed rule imposes on those responsible for evaluating evidence of a material violation (see the discussion in the Release at Part V, Section 205.2 Definitions, (e) Evidence of a material violation). In this respect, such lawyers are no different than United States lawyers who rely on other United States lawyer-specialists. Lawyers who specialize in securities and corporate law do not generally hold themselves out as qualified to practice as environmental lawyers or anti-trust lawyers, nor do they generally attempt to practice in such fields. And lawyers who specialize in environmental law or anti-trust law do not generally hold themselves out as qualified to practice in securities and corporate law, nor do they generally attempt to practice in such fields.

The Commission is well aware of the substantial criticism in other countries that the Sarbanes-Oxley Act constitutes an unwarranted and inappropriate intrusion into matters that are and should be governed by the laws of other jurisdictions. The Commission should not adopt rules that cannot realistically be followed and applied by a large number of persons in foreign jurisdictions. It does not accomplish the stated goal of the law and it does not promote respect for the Commission and its rules in other countries. Furthermore, what little legislative history there is for the Act gives no indication that Congress was looking beyond the borders of the United States when the Act was adopted. Under such circumstances, it would be preferable for the Commission to apply this new rule only to attorneys practicing law in the United States, and to defer to another day the very difficult issues associated with its extraterritorial application. 1

2. The definition of "appearing and practicing before the Commission" is overly broad.

Clause (4) of the definition of "appearing and practicing before the Commission" is overly broad. As written, it applies to any attorney participating in the preparation of any document filed with or submitted to the Commission. That definition is so broad that it includes acquisition agreements, instruments defining the rights of security holders, material contracts, and all other documents that are required to be included as exhibits to Form 10-K annual reports and other documents filed with the Commission. Most documents filed as exhibits under Regulation S-K, Item 600 are in fact documents prepared in the normal course of business of companies and are not prepared for the purpose of being filed with the Commission.

By virtue of the use of the word "submission," the rule also apparently applies to all documents of any kind that are provided to the Commission by foreign private issuers under cover of Form 6-K, even though those documents are neither "filed" with the Commission nor subject to the liability provisions of Section 18 of the Securities Exchange Act of 1934. Form 6-K identifies a wide variety of documents for submission, without regard to the purpose for which they may have been prepared, made public or submitted to a stock exchange.

In both instances described above, the rule is so broad that it includes attorneys who engage in representation that is totally unrelated to the work of the Commission except for the fact that documents with which they have involvement may get filed or submitted to the Commission as an incident of activity in which such attorneys have no involvement. Such attorneys often are not qualified to make the judgments about the application of securities laws, laws involving fiduciary duties or similar laws, and extending the rule to apply to such attorneys is neither practical nor effective to accomplish the Commission's objective.

Instead, the rule should be revised so as to apply to lawyers who prepare documents which are being prepared for the principal purpose of being filed with or submitted to the Commission. In addition, the rule should not apply to documents that are submitted under cover of Form 6-K.

We recommend that Section 205.2(a)(4) be revised to read:

"(4) Retention or employment by the issuer to prepare, or participate in the process of preparing, any statement, opinion, or other writing which the attorney has reason to believe is being prepared primarily for the purpose of being filed with or incorporated into any registration statement, notification, application, report, communication or other document to be filed with or submitted to the Commissioners, the Commission, or its staff, but does not include documents submitted under cover of Form 6-K; or"

3. The definitions of "attorney" and "in the representation of an issuer" are overly broad.

The definition of "attorney" includes any person who is admitted to practice law, whether or not that person is in fact purporting to act as an attorney providing legal advice. The definition of "in the representation of an issuer" similarly is not limited to being employed in the capacity of an attorney by an issuer. These phrases are so broadly defined that they would include, for example, any officer of a company who happened to be an admitted lawyer even if such person was not qualified to or purporting to address issues involving securities laws, fiduciary duties or similar matters. It would also include a director who happened to be a lawyer, even though not employed by the company and even if such person was not qualified to or purporting to address issues involving securities laws, fiduciary duties or similar matters. Finally, it would include a lawyer employed by others, such as underwriters' counsel, whose advice on behalf of other clients happened to benefit an issuer.

The proposed rule essentially imposes lawyers' duties on persons who are not purporting to act as lawyers and who are not purporting to give legal advice. Furthermore, it requires such persons to abide by the objective standards that the proposed rule imposes on attorneys in such situations. Essentially, the rule forces such a person to act as an attorney, perform legal services, and abide by an objective standard of judgment simply by virtue of the person's status. We believe it is unreasonable for the Commission to force lawyers to practice law when they otherwise are not purporting, and in many cases not qualified, to do so.

We believe that these provisions should be amended to provide that an attorney represents an issuer only in circumstances where that attorney is employed in, and is in fact holding himself or herself out as, providing legal advice to that issuer.

4. The definition of "breach of fiduciary duty" imposes United States substantive laws on foreign private issuers.

Section 205.2(d) defines "breach of fiduciary duty" as any breach of fiduciary duty "recognized at common law." Most countries in the world are not "common law" countries, but are "civil law" countries. And even among common law jurisdictions, there have been many statutory and judicial divergences from the common law as originally developed in, and extended to former colonies of, England. Defining "breach of fiduciary duty" by reference to United States common law concepts has the effect of exporting American standards of fiduciary duty to govern the internal affairs of companies throughout the world, perhaps in conflict with, and to the exclusion of, the laws of their home countries. For example, directors of companies in some countries may be elected for the purpose of representing a particular constituency (e.g., employees or the government), and their zealous representation of the interests of that specific constituency might well be regarded as a violation of fiduciary duty concepts that apply in the United States.

At a minimum, this proposed definition should be amended to exclude the phrase "recognized at common law." That phrase is not contained in Section 307 of the Sarbanes-Oxley Act, and its addition to the rule is unnecessary in order to implement the statute. More appropriately, we believe that the Commission should exempt foreign private issuers from the application of the rule insofar as it applies to breaches of fiduciary duty. American lawyers are unsuited to address issues associated with fiduciary duty under the laws of other jurisdictions, and we believe that it is inappropriate for the Commission to attempt to regulate the affairs of foreign lawyers regarding compliance of corporate directors, officers and employees with fiduciary duties under the laws of other countries.

5. "Violation of securities law" should be defined.

In its remarks at Part V, Section 205.2 Definitions, (i) Material violation, the Commissionindicated that the phrase "violation of securities laws" covers violation of the federal securities laws, as defined in Section 2(a)(15) of the Sarbanes-Oxley Act, as well as violation of state securities laws. The Commission also invited comments on the phrase "similar violation." We believe that the Commission should define the phrase "violation of securities laws" to exclude the securities laws of other countries. We do not believe that the Commission should be regulating compliance with the securities laws of other jurisdictions. For the most part, lawyers that practice before the Commission are not versed in the securities laws of other countries, and for the same reasons as discussed above with respect to foreign lawyers and United States securities laws, in most instances, they simply are not qualified, and probably cannot be made qualified, to meet the objective standard that the proposed rule imposes on those responsible for evaluating evidence of a material violation. For this reason, we recommend that the phrase "violation of securities laws" be defined to include violation of United States federal and state securities laws and that the securities laws of foreign jurisdictions specifically be excluded from both the definition of "violation of securities laws" and from the definition of "similar violation."

6. The Commission should exempt foreign private issuers from application of the proposed rule.

The above comments identify a significant number of problems in applying the proposed rule to foreign attorneys. But more fundamentally, it should be recognized that the rule would regulate the internal practices and impose a set of internal procedures and processes on both domestic and foreign companies, procedures and processes that reflect American concepts and practices. As noted above, the Commission is well aware of the substantial criticism in other countries that the Sarbanes-Oxley Act constitutes an unwarranted and inappropriate intrusion into matters that are and should be governed by the laws of other jurisdictions. We believe that the hasty adoption and application of these new rules to foreign private issuers and their attorneys will simply increase that criticism, and make it that much more difficult for the Commission to work with other jurisdictions in developing coordination and cooperation among the principal securities administrators in the world. It also has the potential to adversely affect cooperative efforts in such diverse fields as anti-trust law and accounting policy, and it has the potential to encourage foreign jurisdictions to adopt conflicting policies and practices that would apply to American companies, lawyers and other professionals. For this reason, we urge the Commission, at least on an interim basis, to exempt foreign private issuers from the application of the rule by excluding from the definition of "Issuer" any company that meets the definition of "foreign private issuer" under Rule 3b-4. The Commission could then consult with the principal securities administrators in the major developed countries with a view to coordinating practices in a way that reduces conflicts among jurisdictions.

7. The Commission should amend Rule 12g3-2 to permit foreign private issuers to withdraw as reporting issuers under the Securities Exchange Act of 1934.

Rule 12g3-2(d) makes the exemption contained in Rule 12g3-2(b) unavailable to any foreign private issuer that has, or has had during the prior eighteen months, any security registered under Section 12 or a reporting obligation under Section 15(d).

It is clear that the Sarbanes-Oxley Act is unprecedented in its broad extra-territorial application and intrusion into matters that have traditionally been reserved for regulation by the home country of companies. It is also likely that many foreign companies would not have registered their securities under the Securities Act of 1933 or the Securities Exchange Act of 1934 had they ever conceived of the possibility that the United States would enact a law with the coverage of the Sarbanes-Oxley Act. The effect of Rule 12g3-2(d) is that such companies are "trapped" in the United States, and subject to a level of regulation that is both unprecedented and that could not have been anticipated before the adoption of the Sarbanes-Oxley Act. Under the circumstances, we urge the Commission to amend Rule 12g3-2 to permit foreign private issuers to deregister under Section 12 of the Securities Exchange Act of 1934 and henceforth rely on the Rule 12g3-2(b) exemption. Such an amended rule should be made available to any company that registered securities under the Securities Act of 1933 or the Securities Exchange Act of 1934 prior to the adoption of the amendment. That would give foreign private issuers the opportunity to make a considered decision as to whether they want to continue their involvement in the United States securities markets and be subject to the Sarbanes-Oxley Act, or whether they want to forego involvement in the United States securities markets and be relieved of the application of the Sarbanes-Oxley Act.

If the Commission excludes foreign lawyers from the application of Rule 205, it still has Rule 102(e) available to discipline foreign lawyers who actively engage in practice before the Commission for professional misconduct.